An issue of bonds which is payable in instalments. In California, every municipal issue must be made payable - and paid, not refunded - during forty years from its date.

A "serial bond" needs no sinking fund. It takes the place of a sinking fund, and is one of the best methods of accomplishing results ordinarily obtained through the creation of one. The State of Massachusetts has very wisely made it obligatory for every Massachusetts municipal bond issue to be in serial form and payable within twenty years. Alfred D. Chandler of Boston is recognized as the leading authority on serial bonds in this country.

The recent very able city treasurer of Boston, Mr. George U. Crocker, suggests a plan for the issuing of "serial bonds" perhaps better than anything yet attempted. Instead of making the issue due in equal amounts yearly - by which method the greatest burden upon the tax-payer would be during the first year, as the interest on the issue would then be greater, the burden growing proportionately less each year - Mr. Crocker proposes that the issue shall be made due in such annual instalments, which, taking into consideration the interest, shall make the total amounts necessary to be raised each year approximately equal. As the interest upon the issue would constantly be growing less, the principal sum falling due each year would consequently be greater. Mr. Crocker has evolved this formula by which may be easily ascertained the amount of principal sum which should be due yearly under his plan:

 P = total issue of bonds. Then D: = Pr D1 = amount to be drawn or paid 1st year. (1 + r) N - 1 D2 = amount to be drawn or paid 2d year. D2 = Di (1 + r) r = rate. D3 = D2 (1 + r), etc. n = number of years to run. •

The objection to "serial bonds" arises entirely from the point of view of the investor, as it may be impossible for him to procure an amount of an issue due in one year sufficient to satisfy him. This method of payment is objectionable to a great many investors, and, in Mr. Crocker's case, a working out to the actual amount maturing annually would naturally result in many bonds of odd denominations, which are, as a rule, undesirable. He, therefore, says that as " it (the formula) cannot be used to definitely fix the amount of principal to be paid each year for the reason that we must pay in even thousands, my idea would be to use the formula first and then adjust the results so that even thousands of principal would fall due yearly."

It would be wise for anybody contemplating bidding for an issue of " serial bonds " to refer to the subject " Net Return ' upon the Investment," as the basis for figuring the income return upon " serial bonds " has been confusing to many even experienced bankers.

Under this subject it may be as well to treat of another bond of this nature, a typical example of which is illustrated in the case of the American Mail Steamship Company. This company issued some 6% bonds, the whole issue being payable in ten annual instalments, but instead of certain bonds being due each year, one tenth of each bond was made so payable, being made up of ten principal coupons of \$100 each, besides the coupons for the interest, the interest coupons growing proportionately less in amount from year to year. This method treats every bondholder without partiality. In case of the bonds eventually proving an unsatisfactory investment, each holder would have had equal amounts paid off on each bond. In case of certain numbered bonds maturing each year, the holders of the earlier numbered bonds, in the event of financial insecurity of the issue, would have been the fortunate ones. The objection, of course, to a partial payment bond - by which this plan of issue should be technically known - is that unless the investor owns a considerable amount of them, it will call for the re-investing of a small principal sum annually, which is often undesirable. Theoretically, however, the partial payment bond is the true method of payment, as all holders fare alike.